State apologizes for Lansing income tax error in budget

State Treasury Department could eventually take over city income tax collection services for Lansing. Bernero says it would increase efficiency 'overnight.'

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Gov. Rick Snyder presented Wednesday his fiscal year 2018 and 2019 budget recommendations. The document included an error pertaining to Lansing city income tax collection that was later corrected.(Photo: Julia Nagy / Lansing State Journal)Buy Photo

"We should have said 'any interested city,' Weiss said Thursday afternoon. "And we understand (Lansing) is interested (to participate in the program), and treasury wants to work with them, and that's a great thing."

The LSJ informed Bernero's office of the mistake in the budget report on Thursday afternoon. Snyder's 410-page budget bill doesn't include the mistake.

State officials were in the process Thursday afternoon of correcting the error in all documents.

Danelle Gittus, a Treasury spokesperson said the proposed funding for the Treasury Department would be set aside to expand its city tax processing services for "a new city requesting services."

"We apologize for any confusion this may have caused," Gittus wrote in an email.

It's unclear when a new city could be named. "I'm not sure yet," Gittus said. "There's nothing in the works with anybody right now."

The state's budget must be approved by the state Legislature by Sept. 30. The new fiscal year begins Oct. 1.

On Wednesday, Bernero said he's had discussions with state officials about the Treasury Department taking over Lansing's income tax collection.

He said the state's tax processing system would do a better job finding where residents and non-residents live and will help inform them if they owe money. The city has cases every year when a resident or non-resident forgets to pay income taxes or doesn't know they have to, Bernero said.

Lansing's tax rates, according to the city's website, are 1% for residents and 0.5% for non-residents who work in the city. The corporate rate is 1%.

Bernero said he's not sure how much money Lansing could save by having the state do its income tax services. It's also unclear if any city employees would lose their jobs. The city does hire temporary employees at different times of the year to assist in tax duties.

The state took over collection of Detroit's city income tax in 2016. The treasury department collected more than 300,000 individual Detroit city income tax returns during the 2015 tax year, Gittus said. Starting this year, the department will collect both individual and business tax returns.